PUBLIC, PRIVATE AND THIRD SECTOR ORGANISATIONS

Public, Private, and Third Sector Organizations



Public, Private, and Third Sector Organizations

Introduction

Role of public, private, and third sector organizations differ greatly due to their approach towards profit maximization and corporate social responsibility. Purchasing function of these organizations is dependent on the corporate principles and objective. This paper aims at examining the contextual approach towards corporate objectives, and its impact on stakeholder. This paper identifies the multiple forms stakeholder and their influence on the approaches taken to the purchase of goods and services. Porter, purchasing theorist, once said that the best thing that Britain could have done to correct its balance of payments would have been to make its export industry more competitive, improve methods of manufacturing and marketing in order to sell more abroad.Learning Outcome 1.1

Main objective of private organizations is to serve the interest of a group of people. It focuses on profit maximization and customer needs (Atkin 2009, 66). Public organizations include government department and local authorities. Public organizations run under the government control. Its main objective is to serve the public and give service as ordered by government (Bason 2011, 31).

Third-sector organizations are formed to meet specific objectives and are not driven by profit-making concern. The third-sector organizations are not-for-profit and nongovernmental in nature. These entities basically volunteer a specific cause (Osborne 2008, 43-44).

Private organizations are owned by private individuals, but ownership of public organizations is limited to government bodies. Third sector organizations (TSO) may be owned by individuals or charitable trusts. Private owners and directors control the business operations in the private sector, whereas control resides with national government or local authority. TSO is controlled by trustees or board members. Capital is raised by private owners, but public organizations are financed by the treasury department (Atkin 2009, 72). TSO relies on grants, donations, or foreign aid. Business objective of private organizations is to make profits, but public sector and third-sector organizations aims at giving service. Greater concern is placed on the CSR in public and third sector organizations as compare to private organizations.Learning Outcome 1.2

Private-sector organizations aim at increasing their profits that directly determines their purchasing activities. Private-sector firms are divided into Sole Proprietorship, Partnership, and limited liability companies. Local authority hold limited power to determine the purchasing structure of private companies. Mainly because, ownership in private companies is limited to selective individuals and government bodies have no control over management decision instead of just regulating the operational activities under legal compliance. Companies Ordinance 1985 offer the right to private companies not to disclose its financial accounts to the stakeholder. Hence less concern is placed towards retaining the interest of stakeholder (Atkin 2009, 119).

Restrictive purchasing pattern is observed in the private sector organizations when cost inflation or rising debt cost is observed. Since capital funding is from borrowing or self-investment, many private firms prefer limited purchase when prices of raw material shoot up in short-term to manage their profitability (Atkin 2009, 153).

For example, local authority regulations relate to protecting the interest of consumers, domestic market, and national economy in the private sector. Therefore, private organizations have full discretion on limiting their operational activities such as purchasing of raw material, which subsequently help them control their ...